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AMT Retained with Higher Exemption Amounts

The alternative minimum tax (AMT) is a tax system separate from the regular tax that is intended to prevent a taxpayer with substantial income from avoiding tax liability by using various exclusions, deductions, and credits.

Under it, AMT rates are applied to AMT income determined after the taxpayer “gives back” an assortment of tax benefits. If the tax determined under these calculations exceeds the regular tax, the larger amount is owed. In computing the AMT, only alternative minimum taxable income (AMTI) above an AMT exemption amount is taken into account. The AMT exemption amount is set by statute and adjusted annually for inflation, and the exemption amounts are phased out at higher income levels.

Under pre-Act law, for 2018, the exemption amounts were scheduled to be:

(i) $86,200 for marrieds filing jointly/surviving spouses;

(ii) $55,400 for other unmarried individuals;

(iii) 50% of the marrieds-filing-jointly amount for marrieds filing separately, i.e., $43,100;

And, those exemption amounts were reduced by an amount equal to 25% of the amount by which the individual’s AMTI exceeded:

(i) $164,100 for marrieds filing jointly and surviving spouses (phase-out complete at $508,900);

(ii) $123,100 for unmarried individuals (phase-out complete at $344,700); and

(iii) 50% of the marrieds-filing-jointly amount for marrieds filing separately, i.e., $82,050 (phase-out complete at […]

By |January 12th, 2018|amt, New Tax Laws, tax deductions|0 Comments

Miscellaneous and Overall Limitation on Itemized Deductions Suspended

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Miscellaneous Itemized Deductions Suspended

Under pre-Act law, taxpayers were allowed to deduct certain miscellaneous itemized deductions to the extent they exceeded, in the aggregate, 2% of the taxpayer’s adjusted gross income.

New law. For tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, the deduction for miscellaneous itemized deductions that are subject to the 2% floor is suspended. (Code Sec. 67(g), as added by Act Sec. 11045)

Overall Limitation (“Pease” Limitation) on Itemized Deductions Suspended

Under pre-Act law, higher-income taxpayers who itemized their deductions were subject to a limitation on these deductions (commonly known as the “Pease limitation”). For taxpayers who exceed the threshold, the otherwise allowable amount of itemized deductions was reduced by 3% of the amount of the taxpayers’ adjusted gross income exceeding the threshold. The total reduction couldn’t be greater than 80% of all itemized deductions, and certain itemized deductions were exempt from the Pease limitation.

New law. For tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, the “Pease limitation” on itemized deductions is suspended. (Code Sec. 68(f), as amended by Act Sec. 11046)

By |January 12th, 2018|deduction, deductions, New Tax Laws|0 Comments

Charitable Contribution Deduction Limitation Increased

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The deduction for an individual’s charitable contribution is limited to prescribed percentages of the taxpayer’s “contribution base.” Under pre-Act law, the applicable percentages were 50%, 30%, or 20%, and depended on the type of organization to which the contribution was made, whether the contribution was made “to” or merely “for the use of” the donee organization, and whether the contribution consisted of capital gain property. The 50% limitation applied to public charities and certain private foundations.

No charitable deduction is allowed for contributions of $250 or more unless the donor substantiates the contribution by a contemporaneous written acknowledgment (CWA) from the donee organization. Under Code Sec. 170(f)(8)(D), IRS is authorized to issue regs that exempt donors from this substantiation requirement if the donee organization files a return that contains the same required information; however, IRS has decided not to issue such donee reporting regs.

New law. For contributions made in tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, the 50% limitation under Code Sec. 170(b) for cash contributions to public charities and certain private foundations is increased to 60%. (Code Sec. 170(b)(1)(G), as added by Act Sec. 11023) Contributions exceeding the 60% limitation are generally allowed to be carried forward and […]

Medical Expense Deduction Threshold Temporarily Reduced

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A deduction is allowed for the expenses paid during the tax year for the medical care of the taxpayer, the taxpayer’s spouse, and the taxpayer’s dependents to the extent the expenses exceed a threshold amount.

To be deductible, the expenses may not be reimbursed by insurance or otherwise. If the medical expenses are reimbursed, then they must be reduced by the reimbursement before the threshold is applied. Under pre-Act law, the threshold was generally 10% of AGI.

RIA observation: For tax years beginning after Dec. 31, 2012, and ending before Jan. 1, 2017, a 7.5%-of-AGI floor for medical expenses applied if a taxpayer or the taxpayer’s spouse had reached age 65 before the close of the tax year.

And, under pre-Act law, for alternative minimum tax (AMT) purposes, the medical expenses deduction rules were modified such that medical expenses were only deductible to the extent they exceeded 10% of AGI.

New law. For tax years beginning after Dec. 31, 2016 and ending before Jan. 1, 2019, the threshold on medical expense deductions is reduced to 7.5% for all taxpayers. (Code Sec. 213(f), as amended by Act Sec. 11027(a)) In addition, the rule limiting the medical expense deduction for AMT purposes to 10% of […]

IRS FAQ on Casualty Tree Loss

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We’ve had a number of clients ask us questions since the wildfires on tree loss and what that means in terms of determining a casualty loss on property. Below is an FAQ from the IRS which should hopefully provide some good information. If you have any questions, feel free to ask your Linkenheimer CPA.

Q: How does a taxpayer determine a casualty loss from damaged trees and other landscaping on personal-use residential property when that loss is attributable to a disaster?

A: In determining the amount of a casualty loss from damage to personal-use residential property, trees and other landscaping are considered part of the entire residential property, and are not valued separately or assigned a separate basis, even if purchased separately.

To compute your casualty loss:

Determine your adjusted basis in the entire residential property before the casualty. Your basis is generally the cost of the property, adjusted for improvements and certain other events. For more information on determining your adjusted basis, see Publication 530, Tax information for First-Time Homeowners, and Publication 551, Basis of Assets

Determine the decrease in fair market value of the entire residential property as a result of the casualty.

From the smaller of these […]

By |December 7th, 2017|casualty loss, Community, irs|0 Comments

FAQs Related to Disaster Recovery and the Fires

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Our CPA’s have compiled a list of 25 frequently asked questions related to fire victims and the recovery process. This document will continue to be updated over time as new questions roll in. If you have any additional questions in the meantime that aren’t answered below, please feel free to contact us at Linkenheimer LLP. We’ll continue to work side by side with all of you during this rebuilding process as we put our great community back together.

Frequently asked questions related to disaster relief for this affected by the fires: 

  1. Can an employer make a payment to an employee for missed time as a result of the fire and have that payment excluded from the employees gross income? No, the payments would be considered taxable wages.
  1. What information is needed to substantiate a casualty loss? To substantiate your loss, you’ll need the following, the type of casualty and date it occurred, proof that you were the owner of the property, or if you were a lessee, that you were contractually liable for the damage, whether a claim for reimbursement exists for which there is a reasonable expectation of recovery and documented […]
By |November 8th, 2017|Community, disaster, question, relief|0 Comments

Rental Resources and List of Utilities

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For all those who were displaced by the wild fires in Sonoma County, below is a list of Property Management Companies and Apartment Complexes:

PROPERTY MANAGEMENT COMPANIES – Sonoma County

Westgate Property Management – 707-769-9590
Mahoney Davison Property Management – 707-762-7710
Century 21 Bundesen Property Management – 762-7777
North Bay Property Management – 707-303-3748
DeDe’s Rentals – 707-523-4500
Pacific Properties – 707-206-6645
Hills & Homes – 707-585-2913
Sonoma County Property Rentals – 707-596-1020
Kelley Rentals – 707-824-2222
Alliance Property Management – 707-524-8380
Timely Property Management – 707-588-9200
Baker & Associates – 707-542-4700
Kelley Rentals – 707-824-2222
Task Property Management – 707-579-2013
W Property Management – 707-545-6187
Rental Property Management – 707-843-3696
Safer Property Management – 707-978-4303

APARTMENT COMPLEXES

Rohnert Park
Copeland Creek – 707-586-9741
Creekview Place Apartments – 707-664-8986
Fiori Estate Apartments – 844-404-4061
Oak View of Sonoma Hills (Senior) – 888-321-0662
Park Ridge Apartments – 707-400-6865
Americana Apartments – 707-584-3522
Vintage Point Apartments – 707-664-8028
Dalewood Apartments – 707-664-8432
Edgewood Apartements – 707-585-2241
Santa Alicia Apartments – 707-795-1465
Willow Creek Apartments – 707-739-4189
The Reserve at Rohnert […]

By |November 8th, 2017|Community, disaster, relief|0 Comments

Disaster Relief Tax Seminar

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Disaster Relief and Tax Consequences Seminar

November 28th, December 5, 12, 19th; 9-10:30am

Space is limited and will fill up quickly. Please RSVP below and let us know the day you would like to attend. We look forward to seeing you and answering any questions you might have. Breakfast will be provided and the seminar will be held at our office at 187 Concourse Blvd, Santa Rosa, CA. 95403.

Join the Linkenheimer team as we discuss the tax relief and implications of the local wildfires that have affected so many. There will be a discussion and Q&A time where we will answer your questions regarding your disaster relief options, IRS implications and more.

By |October 31st, 2017|Community, disaster, relief, tax|0 Comments

IRS Gives Tax Relief to Victims of California Wildfires; Extension Filers Have Until Jan. 31 to File

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The following information is from the IRS:

Victims of wildfires ravaging parts of California now have until Jan. 31, 2018, to file certain individual and business tax returns and make certain tax payments, the Internal Revenue Service announced today.

This includes an additional filing extension for taxpayers with valid extensions that run out this coming Monday, Oct. 16.

Currently, the IRS is providing relief to seven California counties: Butte, Lake, Mendocino, Napa, Nevada, Sonoma and Yuba. Individuals and businesses in these localities, as well as firefighters and relief workers who live elsewhere, qualify for the extension. The agency will continue to closely monitor this disaster and may provide other relief to these and other affected localities.

The tax relief postpones various tax filing and payment deadlines that occurred starting on Oct. 8, 2017. As a result, affected individuals and businesses will have until Jan. 31, 2018, to file returns and pay any taxes originally due during this period.

This includes the Jan. 16, 2018 deadline for making quarterly estimated tax payments. For individual tax filers, it also includes 2016 income tax returns that received a tax-filing extension until Oct. 16, 2017. The IRS noted, however, that […]

By |October 13th, 2017|Community, disaster, irs, relief|0 Comments

Tax And Disaster Info For Those Affected By The Fires

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Linkenheimer has been an active part of our Sonoma County community for over 85 years. And like most of you, we have all been profoundly affected by these horrific fires that have swept through our community and continue to affect those that live here. We have lost houses and entire neighborhoods, friends and families have been displaced and like many of you, we are still reeling from the ongoing damage the fires have created. We want to express our utmost condolences to all of our friends, families and clients who have lost something in this disaster. And we want you to know, we will be working side by side with you all during this difficult time to rebuild our community. With power, utilities and cell phone coverage being scarce, we want to try and provide as much information as we can in one post, so that it can be shared effectively with those desperately in need of information and reassurance.

As some of you know, the October 15th tax deadline is near. We have spoken with the IRS regarding extension relief for our clients. Due to our office being located […]

By |October 11th, 2017|Community, disaster, irs, relief|0 Comments